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HomeHyderabadHyderabad Overtakes Bengaluru as Top City for New Office Supply: ANAROCK Report

Hyderabad Overtakes Bengaluru as Top City for New Office Supply: ANAROCK Report

Hyderabad has eclipsed Bengaluru in terms of new office supply influx in the fiscal year 2022-23 (FY23), according to real estate services firm ANAROCK. In total, Hyderabad received 14.94 million square feet (Mn sq. ft.) of new office space, accounting for 31% of total supply in the top seven cities. This represents a 27% increase from FY22. In comparison, Bengaluru had around 12.66 million square feet of office supply completions, accounting for a 26% share, which is 13% lower than the previous fiscal year.

The National Capital Region (NCR) closely followed Hyderabad, completing over 8.82 million square feet of office space in FY23, representing a 52% annual growth. In FY23, Mumbai (MMR) had only 4.18 million square feet of new office supply completed, a 46% decrease from the previous fiscal year.

According to Prashant Thakur, Senior Director and Head of Research at ANAROCK Group, the office real estate market originally showed significant growth in the first half of FY23 but was impacted by the global downturn in the second half. Due to problems such as business layoffs and worldwide recessionary patterns, this tendency is projected to persist.

Despite the uncertainty in the office market, average Grade A office vacancy levels in the top seven cities have decreased slightly, falling from 16% in FY22 to 15.9% in FY23. The lowest vacancy rate is 8.3% in Pune, followed by 10.27% in Chennai and 11.15% in Bengaluru. Hyderabad saw a significant increase in vacancy numbers, whereas MMR, Kolkata, Pune, Bengaluru, Chennai, and NCR saw a decrease.

In FY23, average office rentals in India’s top 7 markets increased by 4% year on year, reaching INR 79/sq. ft./month. With INR 132/sq. ft./month, MMR retained its position as the most expensive office leasing market, followed by Bengaluru at INR 85/sq. ft./month and NCR at INR 82/sq. ft./month. The average office rental in Kolkata was INR 54 per square foot per month.

Overall, the leading cities’ office markets are likely to remain subdued throughout the remainder of 2023 and early 2024. However, depending on the global economic condition, stability is expected in the second half of 2024.

 

 

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